Sterling Asset Management managing director Charles Ross and the company's chief operating officer Mildred Moss, face the press. The were participating in the launch of a new long term investment product at their New Kingston headquarters yesterday. - Michael Sloley /Freelance Photographer
STERLING ASSET Management headed by Charles Ross and Mildred Moss have launched
a new tax free Long-term Investment Account (LIA).
"The rationale behind the launching of this product is that the Government of Jamaica Eurobonds are very attractive investments," Mr. Ross said. "They are investments that offer high returns in US dollars and they are instruments that I think medium and long term investors will find gives them competitive returns."
He was speaking at the launch of the new LIA at Sterling Asset Management's Trafalgar Road, New Kingston headquarters yesterday.
"If we are taking on the risks of the Government of Jamaica, whatever their ratings by Moody's or Standard & Poors we certainly think that's one of the best credit risks available here in Jamaica," he said. "The LIA allows small investors to get a piece of that action.
"Up until now the main beneficiaries of those bonds have been foreign institutions or large local institutions," he said. With the LIA, an investor with just US$1,500 can take advantage of those Eurobonds and use them as a vehicle towards savings or investments for their long term needs whether it be retirement, college education for children or buying a house.
"The LIA gives you an opportunity to meet those objective by using instruments that will offer you a very good return," Mr. Ross said. The LIA is a tax free investment denominated in US dollars. Otherwise Jamaican dollars will be converted at the weighted average buying rate for the US dollar.
The opening balance will comprise of a minimum of US$1,500 and one may save
up to US$ equivalent of J$1 million each year or the equivalent of J$5 million
over 5 years, Mr. Ross said. The investment must be maintained for a minimum
of 5 years with interest compounded semiannually
Every six months one may receive up to 75 per cent of interest, tax free, Mr. Ross said. The balance of 25 per cent is added to the principal and reinvested to the end of 5 years. Interest becomes subject to withholding tax if the terms of the investment are broken.
The minimum addition to the account is US$500 and as many additions to the LIA account as desired may be made up to the maximum annual investment.
At the moment the interest rate on the LIA is 8.5 per cent, which is a yield close to the yields of the Government of Jamaica securities, Mr. Ross said.
"The research that we have done indicates that the long term return on the stock exchange index is about 9 per cent in US dollar terms," he said. "Here you can get 8.5 per cent without the risk involved in the stock exchange and with a smaller sum involved in building a portfolio of Jamaican stocks.
"This account allows for capital appreciation and relates to long term investors and takes into account local inflation and exchange rate adjustments," added Mr. Ross.
